Before approving a short sale, what must the borrower usually demonstrate?

The correct answer pertains to the requirement that the borrower must demonstrate that the property has been listed at a reasonable price. When undergoing a short sale, lenders need assurance that the sale is in their best interest and reflects accurate market conditions. Demonstrating that the property has been listed at a reasonable price is crucial because it shows the lender that the borrower is making an effort to achieve a sale that accurately reflects the current market value of the property, which can influence the lender's decision to approve the short sale.

When a real estate property is listed at a price deemed reasonable, it provides a clear indication to the lender that the borrower is acting in good faith and is genuinely attempting to sell the property. This step is an essential part of the short sale process, as it mitigates potential losses for lenders by ensuring that the property is marketed appropriately.

The other potential considerations, such as proof of income loss or ownership duration, might play a role in the overall context, but they do not specifically address the immediate requirement for listing the property at a fair market price, which directly affects the lender's approval for a short sale transaction.